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Myriad Genetics (MYGN) Misses Q2 Earnings & Revenue Estimates

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Myriad Genetics, Inc. (MYGN - Free Report) reported adjusted earnings per share (EPS) of 23 cents in the second quarter of fiscal 2020, down 39.5% year over year. Adjusted EPS also lagged the Zacks Consensus Estimate by 25.8%. Sharp year-over-year decline in revenues stemming from disappointing performance within prenatal business put pressure on the bottom line.

On a reported basis, loss per share was 11 cents against the prior-year quarter’s earnings of 3 cents.

Revenues

Total revenues dropped 10% year over year to $195.1 million in the quarter under review. The figure also missed the Zacks Consensus Estimate by 6.7%. In fiscal second quarter, the company saw lower-than-expected cash collections from its prenatal business. Prenatal cash collections were affected by issues in billing operations that occurred during the conversion of the homegrown Counsyl billing system to an industry standard system used by Myriad Genetics.

Quarter in Detail

Segment-wise, Molecular diagnostic tests recorded total revenues of $181.1 million, down 11% year over year.

Myriad Genetics, Inc. Price, Consensus and EPS Surprise

 

Myriad Genetics, Inc. Price, Consensus and EPS Surprise

Myriad Genetics, Inc. price-consensus-eps-surprise-chart | Myriad Genetics, Inc. Quote

 

Within this segment, Hereditary Cancer testing revenues fell 7% year over year to $117.7 million. EndoPredict testing revenues rose 18% year over year to $2.6 million. Vectra testing revenues were $10.3 million, down 13% year over year. Other testing revenues surged 380% to $4.8 million year on year.

Further, GeneSight testing revenues fell 6% year over year to $22.5 million in the reported quarter. Prolaris tests raked in revenues of $6.8 million, up 12% year over year. Prenatal testing revenues came in at $16.4 million, down 47%.

Pharmaceutical and clinical service revenues in the quarter under review totaled $14 million, up 1% on a year-over-year basis.

Margin Trends

Gross margin in the quarter under review contracted 139 basis points (bps) to 74.6%. Research and development (R&D) expenses fell 16.1% year over year to $18.8 million along with 0.3% increase in selling, general and administrative (SG&A) expenses to $135.6 million in the reported quarter. Adjusted operating loss was $9 million against adjusted operating profit of $7.1 million in the year-ago quarter.

Financial Position

Myriad Genetics exited second-quarter of fiscal 2020 with cash and cash equivalents of $81.2 million compared with $89.9 million at the end of the first quarter of fiscal 2020.Cumulative cash flow from operating activities at the end of the second quarter was $13.9 million compared with $45.6 million at the end of the year-ago quarter.

2020 Guidance

Myriad Genetics lowered the guidance for fiscal 2020 revenues. The company expects fiscal 2020 revenues to be $735 million compared with the previous guidance of $800-810 million. The Zacks Consensus Estimate for the metric is pegged at $806.5 million.

On the bottom-line front, the company lowered adjusted EPS to 45 cents from the earlier projection of $1.00-$1.10. The current consensus mark for the metric is at $1.06.

Management has also provided the guidance for third-quarter fiscal 2020. The company estimates adjusted EPS of 2 cents and total revenues of 172 million. The Zacks Consensus Estimate for adjusted EPS is pegged at at 32 cents. The same for revenues is at $201.8 million.

Our View

Myriad Genetics exited second-quarter fiscal 2020 on a dismal note. The company saw a decline in Hereditary Cancer, GeneSight, Vectra and Prenatal revenues during the quarter. The company incurred operating loss incurred during the quarter. Lowered fiscal 2020 guidance indicates the persistence of this sluggish trend. However, the company reported strong year-over-year revenue growth in EndoPredict, Prolaris and Other testing segments. Pharmaceutical and clinical service segments also witnessed an upside in revenues. We are upbeat about the FDA approval attained by the company for myChoice CDx and BRACAnalysis CDx as companion diagnostic tests.

Zacks Rank

Myriad Genetics currently has a Zacks Rank of 2 (Buy).

Earnings of Other MedTech Majors at a Glance

Some other top-ranked stocks, which reported solid results this earnings season, are Stryker Corporation (SYK - Free Report) , Accuray Incorporated (ARAY - Free Report) and AmerisourceBergen (ABC - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Revenues of $4.13 billion surpassed the consensus mark by 0.7%. The company carries a Zacks Rank #2.

Accuray reported second-quarter fiscal 2020 adjusted EPS of a penny, versus the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1.

AmerisourceBergen reported first-quarter fiscal 2020 adjusted EPS of $1.76, which beat the Zacks Consensus Estimate of $1.67 by 5.4%. The company, carrying a Zacks Rank #2, has an expected long-term earnings growth rate of 7.4%.

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